PBL reviews punt for Burswood

The Packers are expected to show their hand today and make a definitive announcement concerning Publishing and Broadcasting Ltd's $580 million bid for the remaining 84 per cent of Perth casino operator Burswood.

PBL must decide whether to extend its offer past the July 2 deadline, raise its bid, or do nothing and let the offer lapse Friday week.

PBL sources said that, following a board meeting on Friday, PBL chairman and bid leader James Packer was working through the weekend to review the company's options with regard to Burswood. The company was expected to announce that it was "geared towards getting an outcome" one way or the other, the source said.

If PBL remains interested in Burswood, a higher bid is needed to win control of the company and extract synergies from the acquisition.

"If PBL decides not to raise its offer, we believe it will be unsuccessful in acquiring Burswood," said Commonwealth Securities analyst Derek Francis, in a recent research note. He estimates that a bid of $1.49 a share could win over those shareholders who are thus far reluctant.

PBL may have gained a better view of what institutional shareholders think of its offer last week, following the release of clarifying statements from two institutional shareholders. The rumoured intervention of the Australian Securities and Investments Commission was believed to have led to the release of statements from the fund managers opposing the current offer.

Colonial First State Investments said it reserved the right to accept a bid at $1.40 "if that bid is structured in such a way that it is not a cash-only component".

PM Capital stuck to its guns on Friday. "PM Capital does not intend to accept the PBL cash offer of $1.40 for each of the 34 million Burswood shares," the company said.

After accounting for capital gains, the firm's unit holders would only receive $1.20 a share, which is "well below the value that Burswood shares would sell for in the market if future earnings potential of the business is achieved".

PM Capital does not intend to accept the PBL cash offer of $1.40 for each of the 34 million Burswood shares.

According to CommSec, a higher price will not be hard to justify, with estimates that Burswood is worth $2.15 to PBL if "run by PBL at a similar level of efficiency as Crown (Casino)".

Talk that Kerry Packer, Australia's richest man and PBL deputy chairman, was ambivalent about acquiring Burswood raised doubts as to whether a higher bid would be made. If PBL walks from the deal, it risks further competition down the track, according to CommSec.

"Our analysis shows PBL will not want to wait to buy Burswood, because it risks an aggressive Tabcorp coming after Burswood in the future," Mr Francis said.

Tabcorp is still completing its integration of Jupiter's Casino, which was acquired in October last year, and is still resolving its $2.2 billion bid for TAB, which reached 30 per cent acceptance on Friday.